Interview with Mr Majyd Aziz – President, Employers’ Federation of Pakistan (EFP)
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Mr Majyd Aziz is head of his family business Group that is involved in textiles, commodities, shipping and cargo handling, etc. He has recently been elected President of Employers’ Federation of Pakistan. He is Member of Board of Directors of the government-owned Zarai Taraqiati Bank Limited and former chairman of the government-owned SME Bank Limited. He is also a former president of Karachi Chamber of Commerce and Industry (KCCI), former chairman of SITE Association of Industry, and former director of KESC and SITE Ltd. He is also Senior Advisor for Pakistan for Transnational Strategy Group, based in Washington. Besides these, he is founding Governor of National Center for Dispute Resolution, Secretary General of English Speaking Union of Pakistan, and Founder of many Bilateral Business Forums. He has the honor to represent Pakistan at various international forums and he is Honorary Citizen of Houston as well as Austin, Texas, USA. [/box]
PAGE: HOW WOULD YOU COMMENT ON THE 13TH SUMMIT OF THE ECONOMIC COOPERATION ORGANIZATION (ECO)?
MAJYD AZIZ: Pakistan has been suffering from the menace of terrorism and extremism since many years. This menace has been loaded on to her due to foreign interference and infiltration, primarily because of the volatile situation in Afghanistan.
Moreover, states inimical to the very survival of Pakistan did and do create tragic situations to further their nefarious designs. The ultimate sufferers have been the citizens of Pakistan. Moreover, the image of the nation has been severely impacted by frequent terrorism events that inside the country.
One distressing outcome was the so-called negative travel advisories routinely issued by foreign missions in Islamabad who keep on warning their citizens not to travel to Pakistan, except for essential reasons.
The excellent initiative of the Armed forces of Pakistan under Zarb-e-Azb has brought about a formidable change in the dire scenario, and today, the country is on the highway of peace and stability.
Radd-ul-Fasaad, which is a continuation under the National Action Plan, will undoubtedly break the back of the hostile remnants. It is in this scenario that Pakistan was presented with a morale boosting opportunity to host the 13th Summit of the Economic Cooperation Organization in Islamabad. To add further honey to the pot, the Pakistan Super League cricket final was also held in Lahore recently.
The presence of six Presidents, one Prime Minister, and two Deputy Prime Ministers sent an encouraging signal to the world that these countries are comfortable with Pakistan, are accepting the improved security in the country, and value their relationship with the most geo-strategically located nation in the world. The absence of the President of Afghanistan (possibly not getting a NOC from Pakistan’s eastern neighbor) manifested an immature stance since this was not a bilateral summit but an important regional summit that would create a strong regional economic bloc in the future.
ECO is not a new initiative. It is in existence for more than three decades but has so far not been able to bring about a paradigm shift in enhancement of trade and investment and in forging consensus on real time disputes and issues.
The Islamabad Summit focused on regional connectivity and enhancement of intra-ECO trade. The leaders have come to terms with the fact that trade is pathetically low and there is an obvious disconnect if one is looking at from a holistic approach. The ensuing results would depend on how the momentum is maintained. Unless serious efforts are undertaken, there is a strong possibility that trade between ECO countries would move at snail’s speed.
PAGE: DO YOU THINK THE 13TH SUMMIT OF THE ECONOMIC COOPERATION ORGANIZATION (ECO) WOULD HELP IN DOUBLING INTRA-REGIONAL TRADE IN THE NEXT FIVE YEARS?
MAJYD AZIZ: The hope and prayer is that ECO members would realize that a significant portion of their trade should be among ECO countries. Pakistan has to gear up and enhance bilateral trade with each individual nation.
The total bilateral trade of Pakistan with other ECO members is a pitiful $3.50 billion and there are scant signs of a surge in this figure. Remarkably, 65% of this figure is Pakistan’s bilateral trade with Afghanistan, a country that creates contentious issues with Pakistan at a regular pace. It is an ironic situation because both countries routinely accuse one another of harboring and arming terrorists, and every now and then Pakistan closes the border thus shutting out goods and people movement across the border gates.
What is actually more alarming is the increase in informal and smuggling trade. Thus the official trade figures are superfluous estimates and do not reflect the real time bilateral trade.
Pakistan was, and is, a helpless participant in the UN economic sanctions against Iran. This resulted in a substantial annual decline in bilateral trade figures and, in fact, created an excellent opportunity for those involved in informal trade across the border or through a circuitous route via Dubai. Here too, Pakistan is getting the short end of the stick. Despite positive signals emanating out of Tehran, there is still this back of the mind reluctance to clear the mistiness and get back on the trade avenue.
Turkey, after China, is the blue-eyed country for the present Pakistani political leadership. All efforts are undertaken to attract and favor investments from China and Turkey. The bilateral trade figures have crossed $600 million but this is still a far-off situation against the highlighted potential. Pakistan keenly desires to scale up trade with the Central Asian countries, namely Azerbaijan, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan.
Taking all these into consideration, the possibility of doubling trade within the next five years should be taken with a pinch of salt. This does not mean that it is improbable. The question then is whether the ECO members are serious about removing bottlenecks and roadblocks by ensuring that blatant accusations among members, third country influence on members, and bureaucratic and non-tariff trade barriers are all addressed and removed.
ECO countries are fortunate to possess over 25% of the world’s energy resources but so far, there is no energy trade in the real sense. There is no fast track synergy within ECO to formulate a process where energy rich nations could divert resources to energy-deficient nations. The Iran-Pakistan Gas Pipeline has succumbed to external pressure and the economic sanctions on Iran. The conventional wisdom is that it would take many years for this pipeline to be a reality. The other two innovative initiatives are the CASA-1000 and the TAPI gas pipeline. These two have been approved and agreed and it is imperative that these two projects must be taken up urgently as they would restructure the present energy shortages in Pakistan. These would bring about the transfer of energy resources but the timeline is still many years away. TAPI gas pipeline is assumed to be an alternative to Iran Pakistan gas pipeline while CASA-1000 would reduce the electricity shortfall in Pakistan.
PAGE: THE SUMMIT ADOPTED ISLAMABAD DECLARATION AND VISION 2025. THE DECLARATION CALLS FOR DEVELOPMENT OF TRANSPORT AND COMMUNICATION INFRASTRUCTURE, FACILITATION OF TRADE AND INVESTMENT, PROMOTION OF CONNECTIVITY WITH OTHER REGIONS, EFFECTIVE USE OF ENERGY RESOURCES AND UNDERTAKING MEASURES FOR MAKING THE ECO EFFECTIVE AND EFFICIENT. VISION 2025 UNDERSCORES PROMOTION OF COOPERATION AMONG MEMBER STATES. YOUR VIEWS:
MAJYD AZIZ: A vision is in reality a wish list and it calls for a new generation based on enlightenment and equity rather than a planned strategy. If a vision is to become a reality, then there is an imperative requirement of action. This entails putting into motion the strategic action plan that starts from Ground Zero, and this Ground Zero is the political, economic, and diplomatic situation in ECO countries as of today.
As the saying goes, “even the road to hell is paved with good intentions.” If ECO is to become a powerhouse, and there is no reason why this threshold cannot be attained, then the Member states must develop, at the outset, an effective dispute resolution mechanism that would, to a large extent, melt the iceberg that has kept some countries in conflict with one another. Getting Afghanistan and Pakistan to come to terms is the litmus test. Afghanistan needs Pakistan, especially post-ISAF forces withdrawal. Pakistan has to tackle the inflow of terrorists and extremists from across the Durand Line. Trade needs to be regulated, and the Afghan-Pakistan Transit Trade Agreement has to be transparent and display a win-win situation for both neighbors.
Transportation will be a major headache for ECO countries if goods are to be moved from one place to another. ECO has to develop a nexus with CPEC and this is possible if a broad-based transportation network is envisaged and implemented. Gwadar can become the catalyst for significant transportation movement that would be beneficial for Afghanistan as well as CAR nations. Iran and Turkey, and maybe a couple of CAR countries, can follow the CPEC strategy and bring their investment into Pakistan. Chahbahar Port in Iran and Gwadar Port in Pakistan should be seen as complementary to one another rather than considering them as rivals for regional global seaborne movement of goods and material.
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PAGE: THE SUMMIT CRITICIZED TRAVEL RESTRICTIONS AND ECONOMIC SANCTIONS AGAINST IRAN. WHAT IS YOUR TAKE ON IT?
MAJYD AZIZ: This was a pragmatic decision by the member states. After the signing of Iran’s agreement with P5+1 countries, it was felt that people movement would not be a bone of contention but, despite this historic agreement, the Iranian visa on one’s passport is a red rag for those passport holders who want to travel to Europe and North America.
Furthermore, it is advantageous for European, Russian, Chinese, and American manufacturers and businessmen to do profitable business with Tehran, but the economic sanctions and travel restrictions are discouraging for them too. Likewise, Pakistan, Turkey, and CARs are in an enviable position to launch to scale their bilateral trade with Iran.
The disturbing fear is that the Trump administration, with its erratic and prejudiced thinking, has put a damper on steps to be taken to ease travel restrictions and systematically remove economic sanctions. Washington, egged on by Tel Aviv, is issuing belligerent statements that could flare up the crisis and could become counterproductive not only for Washington but also for Middle Eastern countries and ECO nations.
PAGE: FACTORS RESTRICTING TRADE IN THE REGION INCLUDE DIFFERENCES IN ECONOMIC SYSTEMS, LOGISTIC CONSTRAINTS DUE TO INADEQUATE TRANSPORT LINKAGES AND PROBLEMS WITH BANKING TRANSACTIONS. THE ECOTA WAS SIGNED IN JULY 2003 BUT HAS NOT BEEN IMPLEMENTED YET BECAUSE HALF OF THE MEMBERS ARE STILL TO ACCEDE TO IT. THE AGREEMENT IS AIMED AT REMOVING TRADE BARRIERS FOR INTRA-REGIONAL TRADE. YOUR VIEWS:
MAJYD AZIZ: The economic ecosystem prevalent in any country is of national importance for that country and thus economic policies are prepared and implemented keeping in mind the national interests and protection of local industries and commerce. Pakistan, for example, has to develop and maintain her own economic policies and agenda. Any regional economic bloc factors in all these conditions, and the consensus, if achieved, addresses the concerns of each Member country.
At the same time, it should be understood that countries do have bilateral trade agreements, whether FTA or PTA etc, with other non-bloc countries. Same is the case here among ECO members. Therefore, each country must undertake and protect self-interest and can determine what concessions are to be offered to achieve an overall agreement.
Regional trade and linkages have become powerful channels and tools in enhancing trade and investment and the success rate of regional economic blocs and organizations have generally brought about significant advantages for member countries. No nation can produce everything required by citizens and that is why countries import and export.
ECOTA is one such positive move. However, fourteen years have lapsed and ECOTA is nowhere in sight. This has put ECOTA in the same league with SAFTA, where incidentally both Pakistan and Afghanistan are members. SAFTA has become hostage to contentious issues within the SAARC countries and, in the same manner, ECOTA is also rusting somewhere because some countries have yet to ratify the agreement. This hesitancy is proof positive that there is a lack of seriousness when it comes to trade facilitation, trade improvement, and trade cooperation.
Pakistan’s track record as a formidable member of regional trade and cooperation blocs has been dismal and unfavorable to the overall economic prosperity of the country. Pakistan has not benefitted in any significant way nor has taken maximum advantage of the facilities and attractions under these blocs and organizations. Pakistan has also been at the receiving end through FTAs or PTAs. Maybe, just maybe, a fully functioning ECOTA may get Pakistan out of this depressing mode and may enable Pakistan’s private sector to become formidable trade partners with ECO nations. ECO must not suffer the fate of SAARC. ECO should not become another SAARC.